Dec

What Brokerage Should I Join as A New Real Estate Agent?

By Emily

I’m on the warpath again. Yesterday marked my first post-Christmas interview with a real estate agency.

This time, it was Keller Williams in Bothell, who I was fairly impressed by.

So far, I have interviewed with or applied to the following real estate brokerage houses:

Prudential Northwest Realty – They pay for a lot of your mailings and have a great online corporate presence and relocation business. However, there’s a lot of expense in supporting the franchise.
Edmonds Realty – This was a Mom & Pop I interviewed with last year. They say they have great training, but they have a high (50%) commission split when you get started.
Marcus & Millichap – Read about how that started and ended. They have a great platform to provide value to sellers (namely, lots of inventory throughout the nationwide office, and a nationwide internal MLS to help clients access that inventory. They also have a lot of 1031 buyers). The downside is that you’re at a 50/50 split. Also, Marcus & Millichap focuses just on investment property sales, and they don’t do any leasing.
Fursse & Hall (local Mom & Pop commercial firm). Generous split (30/70 til you reach your cap, which is also low), but they aren’t a big name and don’t have too many agents or any training.
CBRE - I heard rumors that this public company was courting the big BK? This is the 200-lb gorilla in our marketplace. They have a lot of corporate clients and don’t focus much on working with individual Mom and Pop investors.
GVA Kidder Matthews – This commercial real estate firm is big around here (Seattle) and won over a lot of converts from Marcus & Millichap. Their big advantage? 90% commission split. They do leasing and sales, and have a lot of signs up in my neighborhood, but they weren’t hiring when I interviewed there, so I don’t have many specifics.
Zip Realty – This is a great firm if you want to be a buyer’s agent and drive people around in your car all day. There is no out-of-pocket lead generation. Their agents average 1 closing per month. Only 10% of their business is on listings, they are working on getting more listings, but they are all about buyers. Between the discounted commission and fees to the house, you would only make about $3,000 commission on the sale of a $300,000 house, though. In my market, if I were an average agent there, I would make about $36,000 per year working full time with lots of nights and weekends, presumably. The top agents seem to do about 3-4 closings a month, so you could make in the low 6-figures with this firm if you were good. This is perfect for a buyers agent who wants to be in real estate full time and focus just on fulfillment and follow up, not on marketing.
They don’t charge any desk fees here, but the commission splits are really weighted toward the house. You’ll keep about 30% of your 3% gross buyer’s agent commission.
Connect Realty – This is the MLM of real estate companies. This one is pretty intriguing and I would probably pursue them if I just wanted to focus on being a real estate investor and have a place to hang my license for the occasional deal. They charge $200/year as a desk fee and you are locked in at an 80% commission split (if you’re a new agent your first 5 deals are at 70% because you’ll pay a mentor 10% to work with you and help you get going). The MLM part of it is that 15% of your commission (taken out of the 20% that you don’t get) goes to the people who brought you into the company… your “upline.” This means that if you recruit a lot of new agents, you can profit from their deals and their commissions as well as your own.
However, I don’t think this model makes a lot of sense to me as a new agent. I need training and support, which Connect doesn’t seem to have available yet. Perhaps if you had a supportive sponsor to bring you into the business and help you get started you could do well, but I don’t know anyone who is in this firm.

Since agents essentially get paid to bring you into the company, it’s harder to find a lot of balanced feedback online – everyone is trying to recruit you.
Keller WIlliams Realty – This is the firm I interviewed with today. I really liked them. You have an $18,000 yearly commission split cap and after that you’re at 100% commission. The desk fee is only $32/month, so it’s very affordable. They pride themselves on having extensive training. 50% of the office’s profit is split with the agents (the other 50% goes to the franchisee).
Even though they’re not a big brand in Seattle, yet, I like what I see here. They pride themselves on a great training program, which I think is critical. They also encourage team building so you can work your way into a leveraged business model (e.g. hiring personal assistants, buyers agents, listing specialists, etc.). They also have a residual income model similar to connect realty, but it seems to be much less of a focus (more the icing on the cake, than half the cake, itself).
Windermere Realty – This is the big “prestigious” local player in the area. I haven’t interviewed with them yet. They seem to lead with the company attitude of “you need us more than we need you” when it comes to their agents, and don’t give agents much freedom to agents to market themselves prominently.
Redfin – This is an online broker who pays you “by the job” – you go show a property, they give you $120. You go let the property inspector in, they give you $50. This is a great “part time job” or “independent contractor” model. You can earn a little extra money with your license without needing to build a business or have marketing expenses. This would be ideal for the person who wanted to be a freelance real estate agent. Unfortunately, after they initially responded to my resume, I’ve called and emailed about 7 times and haven’t been able to hear back from them.

My conclusions as a new agent looking to choose a real estate broker:

Based on my research of the residential real estate brokerage model, I don’t see that any individual firm is able to offer sellers a distinct advantage. (Am I wrong here, experienced agents?) What one firm can offer you is pretty much as good as another. When a consumer chooses to buy or sell a house, he is most often making the decision to work with an individual AGENT rather than choosing a firm. The exception to this may be the one or two “name brand” firms that dominate a given marketplace.

What that means to me – as an agent – is that I should set up my business to be able to market MYSELF, through blogging, websites, postcards, signs, etc., rather than marketing my COMPANY first and foremost. I should also align myself with a company that lets me keep as much revenue available as possible (low commission splits and caps) so I can reinvest in marketing myself.

Although most sellers choose to work with the first agent they meet, some (about 30% as I understand it) interview multiple agents. When they choose an agent, what are they going to make the decision based on?

What sellers are looking for in their real estate agent:

Is my house priced correctly so it will sell in the desired time frame?
Is my house marketed correctly? What investment in marketing is my agent willing to make?
Communication – how often does my realtor get in touch with me? Is she/he pleasant to deal with, return my calls, etc.
Negotiations – How good is the realtor at negotiating on my behalf?
Closing details – How much hassle will I have in getting the closing together?
Price – Will the agent discount his/her commission?

What Does the Brokerage Offer That The Individual Agent Doesn’t?

When push comes to shove, most agents don’t sell their own listings any more. The buyer and the buyer’s agent usually come through different venues – not through the listing agent. That reduces the listing agent’s job to primarily just exposing the property, making sure it is priced correctly, and then coordinating communication to get the deal done. As agents, we offer these services and our expertise in performing them. Assuming we offer excellent service, the only other place for us to compete is price. The question of whether or not to cut commissions is one that could develop into a completely separate blog post. I don’t know the inside perspective from the realtor’s view point yet, but as a consumer, I can say the following…

I continue to maintain (sacrilege, I know…) that the reason so many realtors flood the marketplace is that it is such a profitable high-margin business. Especially when realtors market themselves on the basis of availability and relationship (I’m friendly and smiley) rather than expertise, it seems that there is very little to differentiate one agent from another. We’re ALL nice when we want your business, right?

Brokerages that serve their agents well, will ultimately build a reputation for serving their clients well, too.

Plus, what do agents do with all the profits that they earn in business, they plow it back into marketing… and not marketing to SERVE clients, but marketing to FIND clients. This giant inefficiency is my primary gripe with the real estate brokerage industry. It would go away if it was less profitable, and it would be less profitable if consumers insisted on using discount-priced agents. While some clients use these, many believe that you get what you pay for in life, and are more comfortable going with a full-price agent. So be it.

So, what it comes down to – if the well-informed consumer were really able to make an educated choice is finding an agent who is good at doing their job, and getting the best possible price for the agents services.

Hint to Clients – ask the agent if they’ll negotiate on commissions.

Hint to Agents: Don’t offer to negotiate on commissions – show your value and then stand firm on your price, Americans hate to negotiate, so if they’re not sold on working with you, it’s rarely because of price… find out what their other objections are.

In my opinion, finding an agent “who is good” comes down to training and hard work. As a new agent, I want a real estate broker who offers me in-depth training when I get started, and ongoing training to help me get better and better. I don’t just want to be trained in how to get leads (this is good for ME) but how to implement systems and serve my clients better. (This is good for THEM.)

In the long run, I think the best agents will choose the brokerage that allows them to serve their clients best, and make the most money. Brokerages that serve their agents well, will ultimately build a reputation for serving their clients well, too.

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